Southern California Gas Company and its parent company Sempra Energy have agreed to pay up to $1.8 billion to settle the claims of over 35,000 victims of the October 2015 Aliso Canyon natural gas storage facility blowout, according to a personal injury law firm representing plaintiffs impacted by the leak.
The Aliso Canyon blowout remains the biggest natural gas leak in U.S. history. The decision follows years of intense litigation and more than $5 million in discovery sanctions.
The settlement is not yet final. The agreement is subject to about 97% of plaintiffs accepting it, attorneys said. It could be reduced if fewer agree or it could wind up in court.
San Fernando Valley communities have been dealing with the aftermath of the gas leak since 2015 when 109,000 metric tons of methane were released into the atmosphere over 118 days, forcing about 8,300 households to flee their homes.
SoCalGas said in a statement that it announced agreements that are expected to resolve substantially all material civil litigation against the company related to the mammoth gas leak. The gas company said it will record an after-tax charge of approximately $1.1 billion this month. Settlement costs will not be borne by ratepayers, the utility said.
Sempra and SoCalGas have denied wrongdoing. Subject to certain conditions, the settlement money will be allocated among the plaintiffs in accordance with a protocol developed by neutral, independent allocators, attorneys said.
The first agreement is subject to obtaining roughly 97% participation among approximately 36,000 individual plaintiffs and court approval of the settlement allocation process, among other conditions, gas company officials said.
The second and third agreements involve settlements with a class estimated to include at least 23,000 properties and the dismissal of the named plaintiffs in a putative business-class action, both of which are also subject to court approval.
“These agreements are an important milestone that will help the community and our company work toward putting this difficult chapter behind us,” said Scott Drury, CEO of the utility, in a statement. “In the years since the leak, SoCalGas has worked alongside regulators, technical experts, and our neighbors to enhance safety at all our underground storage facilities and our engagement with the community. As a result, our storage facilities operate by what regulators and experts have called some of the most rigorous safety standards in the country.”
During Monday’s press conference, attorneys representing thousands of plaintiffs declined to provide the average amount residents would receive under current terms of the settlement, adding that residents would be compensated based on their individual circumstances.
Lead trial attorney Brian Panish of Panish Shea & Boyle said in a phone interview that the settlement is not a done deal.
Panish added that the settlement is “a master agreement framework for the final settlement.” It might be finalized only if about 97% of clients agree with the settlement terms, he said. Otherwise, it will go to trial.
Panish noted that he would recommend his clients agree with the settlement “but it’s people’s personal choice. I know the case and how long it’s going to take and how much it’s going to cost. I believe it’s a good resolution of the case.”
But Craig Galanti, a Porter Ranch resident and member of the Community Advisory Group, which provides feedback to the Los Angeles County Department of Public Health on the Aliso Canyon health research study, said the financial compensation that the settlement offers to plaintiffs is very low, especially considering “the impact of the disaster and the number of people impacted. People have to appreciate what’s going to be taken out for legal fees…Those sort of reductions should be taken into consideration.”
Galanti added that the long-term health impacts from the gas leak are still unknown. It’s also unclear, he said whether the settlement — if approved — would stop residents from pursuing damages in the future and whether a sizable monetary fund would be put aside for long-term medical monitoring.
During the litigation, SoCalGas, Sempra Energy and their lawyers from Morgan, Lewis & Bockius LLP were sanctioned over $5.7 million, one of the largest discovery sanctions in California history, according to the plaintiffs’ attorneys.
The utility giants and their counsel wrongfully withheld over 150,000 documents under a pattern of discovery misconduct that a judge characterized as “willful, intentional and in bad faith,” according to the plaintiffs’ lawyers.
In September 2016, SoCalGas pleaded no contest to a misdemeanor count of failing to immediately report the gas leak, which began Oct. 23, 2015, and wasn’t capped until mid-February 2016. Three other misdemeanor charges — one count of discharging air contaminants and two more counts of failing to report the release of hazardous materials — were dismissed as part of the deal.
Under its $4 million settlement agreement with prosecutors, SoCalGas was required to install and maintain an infrared methane monitoring system at the Aliso Canyon site — estimated to cost between $1.2 million and $1.5 million — and to retain an outside company to test and certify that the monitoring system and real-time pressure monitors to be placed at each gas well are working properly.
The agreement also mandated the hiring of a half-dozen full-time employees to operate and maintain the new leak-detection systems 24 hours a day at a cost of about $2.25 million over three years.
The agreement also called for the company to revise and adopt new reporting policies for actual and threatened releases of hazardous materials to the appropriate agencies, and mandated training courses on proper notification procedures for all of the utility’s employees who work at natural gas storage facilities within Los Angeles County.
Health concerns stemming from the gas leak prompted thousands of residents to move out of the area into temporary housing at the expense of SoCalGas. Residents have complained of health issues due to exposure to benzene, uranium, crude oil and other cancer-causing chemicals.
Residents said they have been living through “crisis after crisis” in the years following the gas leak — and then reliving their trauma when they evacuated their homes during the Saddleridge fire, which broke out in Sylmar and raged toward Porter Ranch, charring thousands of acres.
“The devastating gas blowout will not be behind us until this facility is completely shut down and the danger it poses to the community is gone,” said Matt Pakucko, president and co-founder of Save Porter Ranch, who was among thousands of residents who evacuated their homes following the 2015 gas leak. “There is a long road between this announcement and any kind of resolution.”
Alexandra Nagy, Food & Water Watch’s California director, echoed Pakucko’s concerns, saying the Aliso Canyon site needs to be phased out.
“This facility will never be safe and it needs to be closed immediately and the settlement doesn’t change that,” she said, adding that the facility “poses serious harm to the residents of Los Angeles. On top of that, it’s a ticking time bomb with the earthquake risk and the climate change it has by leaking methane.”
Nearly six years later, residents said, they still struggle with nosebleeds, dizziness and respiratory problems. They have worked to try to close the plant and have fought efforts by SoCalGas to expand the site’s capacity.
Helen Attai of Granada Hills said she still experiences fatigue and nosebleeds, especially at night.
“It’s terrible,” she said. “We don’t know what’s going to happen to us in the future.”
In 2017, Gov. Brown directed several state agencies to study the permanent closure of the Aliso Canyon facility. Two years later, Gov. Newsom sent a letter to the CPUC asking to expedite the closure while keeping reliable energy service.
In June, the Los Angeles City Council passed a resolution, urging the state to streamline the permanent closure of the facility.
Dozens of residents and activists urged the state agency overseeing operations at Aliso Canyon natural gas storage facility to prevent the company from expanding its capacity, lining up to speak at the agency’s meeting on Thursday, Aug. 5.
Los Angeles County Supervisors voted unanimously on July 27, to send a letter to the California Public Utilities Commission, which oversees operations at the Aliso Canyon natural gas storage facility, to stop SoCalGas from expanding the site’s storage capacity.
Christine Detz, a spokesperson for SoCalGas, wrote in an email the company “worked with independent experts and state regulators to redesign Aliso Canyon and all of our storage facilities to be state of the art.”
City News Service contributed to this report
